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The shares of MicroStrategy, one of the largest corporate holders of Bitcoin (BTC), lost 90% of their value within a 24-hour time frame. This is due to 10-for-1 split that was previously announced.
At press time, MicroStrategy’s stock is trading at $124.69, demonstrating over an 81% decrease year-to-date (YTD).
Bitcoin yet to recover
MicroStrategy’s stock split coincides with recent volatility in the Bitcoin market. Although the leading cryptocurrency increased slightly by 0.5% in the past day, it is still down by over 11% on the weekly time frame.
Godfrey BenjaminMicroStrategy has a multi-billion dollar stake in Bitcoin. Michael Saylor, MicroStrategy’s chairman and co-founder, disclosed in an earlier U.Today report that the company's Bitcoin stash now amounts to 226,500 BTC. Notably, the company began purchasing BTC in 2020 and has not looked back. MicroStrategy recently funded its Bitcoin acquisition with a $700 million convertible senior notes raised from investors with a five-year maturity.
Meanwhile, Bitcoin is yet to reclaim its previous highs after trading in the $49,000 range last week, contributing to the decline in MicroStrategy’s stock. As of this writing, BTC is trading at $57,389, with trading volume declining by 9.9% to $39.9 billion.
Even though MicroStrategy offers other services, analysts believe its stake in Bitcoin can impact the price of its stock. Popular crypto critic Peter Schiff said the firm will be forced to sell its Bitcoin holdings by its creditors. According to him, losses in Bitcoin are inevitable, because the cryptocurrency is worthless.
Alex DovbnyaMicroStrategy's efforts to boost liquidity
Despite ongoing challenges, the announced 10-for-1 stock split aims to boost accessibility and liquidation for users. The stock split, which took effect Aug. 1, will allow each holder of MSTR Class A stock to receive nine additional shares in the same class.
Likewise, the same allocation holds for holders of Class B shares. MicroStrategy emphasized that the stock split will not impact the voting rights of shareholders.
Tomiwabold Olajide
Dan Burgin
Alex Dovbnya